OPEC's Chasm of Doom
OPEC's members are divided by many things: language; size; politics; sometimes outright war.
And money. Don't forget money.
If you want to understand why OPEC has responded to its current crisis with all the cohesion of cat herding, some numbers in the Energy Information Administration's "OPEC Revenue Fact Sheet," published on Tuesday, provide some important clues. First up, estimated revenue, adjusted for inflation:
The estimate for this year, $337 billion in real terms, is barely a third of 2012's peak -- and, uncannily, exactly the same as the consensus forecast for the combined revenue of Exxon Mobil and Chevron in 2016. Of course, those two only have to pay their employees, creditors and shareholders. OPEC's members have about 700 million people to answer to, roughly double the amount in 1980 1 . So, on a per capita basis, those numbers look worse:
What really stands out from that chart isn't just that net oil exports are set to generate less than $500 per man, woman and child this year. It's that even when oil was trading in triple digits a few years ago, the export revenue per person was still less than half what it was at the beginning of the 1980s. The need to diversify away from oil, such as Saudi Arabia is touting, reflects not just an acute crisis but a long-festering, chronic economic condition.
The added twist, which is forcing OPEC to crack rather than coalesce, is that while all members are suffering, the degree of pain differs widely:
Can it be any accident that Nigeria, sitting at the bottom of that chart, is currently convulsed by violence that has taken the country's oil production to its lowest level in 27 years (which in turn pushes the revenue lower)?
What's more, this divide has actually expanded, not compressed, as OPEC's overall revenue has plummeted. This next chart plots the highest per capita oil export revenue of any OPEC member as a multiple of the lowest. Along with Indonesia (a net importer of oil), I've excluded the outliers of Qatar and Kuwait here.
History suggests a good recipe for dooming an organization, regime or even a country is to take a pie, shrink it dramatically, and divide the pieces very unevenly. That's where OPEC finds itself today.
In order to make this comparison, I've adjusted the numbers to include Ecuador and Angola in the 1980 number and Indonesia in 2015's number (it rejoined OPEC towards the end of last year).
To contact the author of this story:
Liam Denning in San Francisco at firstname.lastname@example.org
To contact the editor responsible for this story:
Mark Gongloff at email@example.com